The symptoms appear to be very similar to https://www.techrepublic.com.com/5208-11184-0.html?forumID=47&threadID=165060
However, that was an XP Pro SP2 system, this is XP MCE 2005 SP3+ (all patches current). I’ve also noticed it seems to occur only in a non-Admin acct, but that could simply be coincidence, since I rarely login as Admin after cold-boot.
My workaround (assuming fast user-switching is enabled): {Win}L, logon as Admin, logoff non-Admin via TaskMan, logoff Admin, logon non-Admin
I’ve tried other things, such as {Ctrl}{Alt}{Del} logoff from the hung session, but WinXP then won’t respond to the keyboard to allow logon to any acct.
… when it becomes more than an annoyance, I’ll have a closer look, perhaps via Process Explorer, to see if it is possible to determine what is hanging.